Enhancing the protection of rights of financial companies and consumers

Enhancing the protection of rights of financial companies and consumers

 

On 12/28/11, FSC decided to enhance the protection of rights of financial companies and consumers in the process of inspection and sanction. The main reasons for this decision is as follows

1. There has been criticism on the way of financial supervision which has been done by ‘Financial Supervision T/F’.

• Right of defense of financial companies has been admitted in restrictive cases.
• Released contents of sanction are not enough and scope of release is restrictive.

1. To solve these problems, FSC decided to implement 『Rules of inspection of financial companies and sanctions』 and 『Ways to expand the level of revealed sanctions』.

• Through 『Rules of inspection of financial companies and sanctions』, reinforce the rights of protection of financial companies, executives and staff members.
• By implementing 『Ways to expand the level of revealed sanctions』, stress the financial consumers’ right to know and prevention of illegal action by financial companies.

To see more detailed information, these are specified contents each of them (『Rules of inspection of financial companies and sanctions』 and 『Ways to expand the level of revealed sanctions』)

Revision of 『Rules of inspection and sanction』 includes 4 contents.

1. Guarantee the right of defense of executives in financial company and create the duty to care for statement.

• Whenever the confirmation document should be written, the right of support is guaranteed by lawyer etc.
• Whenever the confirmation document should be written, new obligation is created to care for the important statement as inspection record.

(Expected effect): This act could reinforce the right of defense of executives in the process of inspections, also, inspector of FSS could make careful progress.

1. Obligation to notify before the inspection.

• 1 week before the inspection, pre-notification including the purpose and expected period is obligated.
• (Exception): If the purpose of inspection seems hard to achieve because of the pre-notification, duty of pre-notification is not needed.

If it’s expected to have serious impact to achieve the purpose of inspection (manipulation of documents etc) If it’s regarded to bring bad effect to financial market (cause fear to investor etc) If there’s not enough time to pre-notification (inevitable case) If there are etc cases which makes hard to achieve the purpose of inspection

 

  (Expected effect): Financial companies and executives can have enough time before inspection.

1. New system of protecting rights

• Investigate the civil complaint regarding financial companies’ inspection in an independent position and prescribe the reason of establishing ‘center in charge of protecting rights’.

(Expected effect): Reinforce the legal procedures by preparing enough internal control methods related to inspections and control the possibility of illegal inspections.

1. New obligation to return the financial organizations’ books of FSS

• Specify the obligation of return if financial companies demand FSS to return the books which were submitted to FSS.

(Expected effect): Financial companies’ efficiency is improved since financial companies could get the books back whenever they want.

    As mentioned above, the contents of revealed sanctions were restricted. So to solve this problem, FSS made a 『Ways to expand the level of revealed sanctions』. The contents are as follows.

n  Adopt a new principle which reveals all data including the results of sanction.

l  Open even the minor disciplinary actions to public such as disciplinary warning of executives.

l  Reveal the contents of inspection as it is except for private information (name, resident regulation number, address etc).

   This is a tablet which summarizes the 『Ways to expand the level of revealed sanctions』.

Division	Target of action	Current revealed contents	Revision
Kinds of sanctions	Financial companies	Cancel of permission,	Institutional warning
	Executives	Suspension, suggestion of dismissal	warning
	Staffs	Dismissal, reprimand, suspension	Warning, follow-up measures
	Financial sanctions	Fine, penalty	Same with current contents
Level of revelation		Summarized revelation including related laws, contents of measures	Reveal the paper of inspection as it is

So, through these new acts, right to know is highly improved due to the fact that financial consumers could know all the present conditions of sanctions imposed to financial companies and law abiding spirit of financial companies could be enhanced because the financial companies themselves could know the reasons of sanctions.

Ju Hyun Han (blackhall4@naver.com)

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